SolarEdge Technologies Inc (NASDAQ:SEDG) Reports Mixed Q3 Results and Weak Guidance, Sending Shares Lower

SolarEdge Technologies Inc (NASDAQ:SEDG) reported third-quarter financial results that presented a mixed picture for investors, leading to a sharp negative reaction in pre-market trading. While the company demonstrated significant year-over-year revenue growth and a narrowing loss, its performance against analyst expectations and a cautious near-term outlook appear to have disappointed the market.

Earnings and Revenue Versus Estimates

The company's Q3 2025 results revealed a notable divergence between top-line performance and bottom-line expectations. On the positive side, SolarEdge reported revenue of $340.2 million, a substantial 44.5% increase compared to the same quarter last year. However, this figure came in slightly below the analyst consensus estimate of $342.8 million.

The performance on profitability metrics was more favorable. The company reported a non-GAAP loss per share of $0.31, which was a significant improvement over the loss of $0.81 per share in the prior quarter. More importantly, this result beat analyst expectations, as the consensus estimate was for a larger loss of $0.39 per share.

Key financial improvements from the prior quarter include:

• Revenue growth of 18% from $289.4 million.
• GAAP gross margin expansion to 21.2%, up from 11.1%.
• A reduced GAAP net loss of $50.1 million, compared to $124.7 million.
• Positive free cash flow generation of $22.8 million, a reversal from the $9.1 million used in the previous quarter.

Market Reaction and Forward Guidance

Despite the improved profitability, the market's immediate reaction was negative, with the stock down approximately 10.5% in pre-market activity. This sell-off is likely attributable to the company's guidance for the fourth quarter of 2025, which fell short of Wall Street's expectations.

SolarEdge provided Q4 revenue guidance in the range of $310 million to $340 million. The midpoint of this range, $325 million, sits about 4.7% below the analyst sales estimate of $341 million for the upcoming quarter. The company also expects a non-GAAP gross margin between 19% and 23%, which includes an approximate 2% negative impact from tariffs.

Operational Highlights and Strategic Position

Beyond the headline numbers, the earnings release highlighted several operational milestones and a reaffirmed strategic direction. CEO Shuki Nir stated the company is making "steady progress in our turnaround," citing three consecutive quarters of revenue growth and improving margins.

Operational metrics for Q3 2025 included:

• Recognition of 92.7 thousand inverters, 2.95 million optimizers, and 230 MWh of batteries for PV applications as revenue.
• The company's cash and investments portfolio, net of debt, grew by $77 million to $208.8 million.

The company also announced a change in its key performance metrics, moving away from reporting products shipped to focusing solely on products recognized as revenue, which it believes offers a more accurate measurement of earnings.

Conclusion

SolarEdge's third-quarter results paint a picture of a company in the midst of a operational turnaround, successfully growing sales and sharply reducing its losses. The beat on bottom-line EPS estimates underscores this progress. However, the market's negative reaction highlights the weight that future guidance carries. The softer-than-expected revenue outlook for the critical fourth quarter suggests that the pace of recovery may be slower than investors had hoped, tempering enthusiasm around the solid quarterly execution.

For a detailed look at historical earnings and future analyst estimates for SolarEdge Technologies Inc (NASDAQ:SEDG), you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The author has no position in the stock mentioned. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.